Construction Spending Dips in October

Residential and Nonresidential Outlays Fall Amid Growing Economic UncertaintySource: Higher Financing Costs Weigh on Construction

  • Total construction spending dropped 0.3% during October. Overall outlays were up 9.2% on a year-over-year basis in October.
  • The monthly decline was broad-based, with both total residential (-0.3%) and nonresidential (-0.3%) expenditures falling in October.
  • October’s drop in spending occurred mostly with private construction projects. Total private spending dipped 0.5% during the month, while public outlays rose 0.6%.
  • The recent weakness in private construction spending is mostly owed to rising interest rates and heightened economic uncertainty. This year’s sharp increase in mortgage rates has resulted in a drop in buyer demand, and builders have responded by curtailing new single-family production. Meanwhile, higher financing costs and uncertainty surrounding the economic outlook appear to be thinning the pipeline of new nonresidential projects and leading banks to tighten lending standards.